When you imagine a customer purchasing an item or service with a credit card, you probably picture someone running a piece of plastic through your physical card terminal reader. With the upsurge of e-commerce and mobile payments, that is not necessarily the case anymore. Virtual credit cards are starting to occupy a prominent place in people’s purchasing behaviors.
What Are Virtual Credit Cards?
In fact, there is no actual card at all when it comes to a virtual credit card. When someone makes a mobile or online payment, a unique number is generated. It is usually for the exact amount of the transaction and is only used once.
Virtual credit card numbers are generally associated with an actual credit card, and are provided usually as a free service by the original card issuer to their customers. Most often, the virtual card number is used as an added measure of security when making an online payment.
Advantages of Virtual Credit Cards
There are several reasons why virtual credit card numbers are used and accepted. They include:
- Security is enhanced because the transaction is encrypted and single-use.
- The user has control over many factors, including how much is spent and where and when the card can be used.
- They can be more cost-effective for businesses due to the efficiency of automation and reduction in human error.
- They makes accounting and monitoring tasks easier for businesses.
- They offer efficiency, control and security when dealing with corporate travel, electronic accounts payable and mobile payments.
The Downsides of Virtual Credit Cards
As with any innovation, virtual cards also have their problems. Any entrepreneur looking into incorporating them should consider the following before taking the plunge.
- Virtual cards do not offer the same level of consumer protections as do standard credit cards.
- It can be more of a challenge to deal with a customer’s request for a refund.
- Verification of a customer’s card may be a challenge as they may need to provide a standard card as backup, which could cause frustration.
- Not all merchants accept mobile wallet payments, which are often the way that virtual credit cards are generated.
Should you accept virtual credit cards? After reviewing the pros and cons of this new technology, only you can be the judge. Just keep in mind that like standard mobile and online transactions, this could be a trend that only looks to increase in the upcoming years.